Infrastructure investor I Squared Capital is on the cusp of finalizing a deal to purchase Arriva, Deutsche Bahn’s international transport business, as reported on international media such as Reuters and Financial Times. The transaction would value Arriva, a prominent operator of London’s iconic red buses and UK train services, at approximately 1.6 billion euros, encompassing its debt.

Despite the deal being in its advanced stages, there remains a possibility of adjustments in the timing. This uncertainty arises from the intricate process of disentangling Arriva’s operations from the German state-owned railway company, which is expected to extend the deal’s closure to several more months.

Deutsche Bahn – Arriva divestment

Deutsche Bahn has been endeavoring to divest a portion of Arriva for years to alleviate its debt and reinvest in domestic operations. Arriva, responsible for transporting 1.5 billion rail and bus passengers annually across ten countries, employs 35,500 individuals and provides a mix of rail services, local buses, commuter coaches, and trams. In the UK, it operates 4,700 buses and oversees 15% of the passenger network, including the London Overground, CrossCountry, and Chiltern Railways franchises.

The Financial Times notes that “in 2022, Arriva’s annual sales rose 3.6 per cent year on year to €4.2bn, according to Deutsche Bahn’s annual report, accounting for 7.5 per cent of the German group’s total revenue. The unit is barely profitable, generating an adjusted operating profit of just €12mn last year, up from an operating loss of €73mn in 2021″.

The UK-based newspaper also observes that “I Squared made an effort to buy the UK’s First Group last year, though a £1.23bn bid for the rail and bus operator was rejected as “significantly undervaluing” the company”.

This potential acquisition aligns with a broader trend of transportation companies transitioning to private ownership. I Squared Capital, known for its global investments, has a history in the sector and is eyeing opportunities in urban transportation electrification.

Both I Squared Capital and Deutsche Bahn have refrained from making official comments about the deal’s specifics, although Deutsche Bahn expressed its intent to divest Arriva by the end of 2024, marking significant progress in the ongoing process.


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